On a podcast published today (embedded below), Sumo.com CEO Noah Kagan explains why he was willing to pay so much for the domain. He used to not value domain names that much, but explains why he changed his mind and now realizes the importance.

He also explained how, as a percentage of revenue, it really isn’t that much. They paid $500,000 up front and will pay the remaining $1 million over 5 years, so just about $16,000 a month. month. The company spends $50,000 a month on servers alone. $16,000 a month is a small price to pay for your entire brand!

Frankly, this podcast will make great sales material when someone wants to buy your domain but isn’t willing to pay much. Noah explains how much value it adds to his company, and how we won’t kick himself down the road because someone else bought the domain.

The deal includes a large upfront cash payment of $500,000 plus equal monthly payments over 5 years. Escrow.com is handling the escrow.

I caught up with the Austin, Texas-based online marketing technology company this week to learn more about its domain name acquisition.

DNW: SumoMe has been around for a while, so how long have you been interested in the Sumo.com domain name?

Sumo: We started to pursue the name in April 2010 to improve brand value, recruiting, and to be the de facto Sumo brand. Our co-founder and CEO, Noah Kagan, was one of the first employees at Facebook (went through TheFacebook > Facebook.com transition) and Mint (went through MyMint.com > Mint.com transition), so he is no stranger to the value of a strong .Com.

It has taken nearly 7 years to acquire it. Initially, the owners were unresponsive so we found an intro through a mutual contact on LinkedIn. Conversations were ongoing, but the owners would stop responding for months on end. We even hired 3 brokers to help push this through, but none were able to get the owners to budge.

We purchased sumo.ly and sumos.com, but didn’t want to settle for second best and Noah kept persisting. Ultimately, he offered them $1.5MM and a strict deadline to motivate them to close.

DNW: Are you changing the domain from SumoMe.com to Sumo.com or just using it as a forward?

Sumo: We are changing the domain to Sumo.com and rebranding from SumoMe to Sumo, which includes an updated logo and updating most mentions of SumoMe on our site and external mediums. We will be redirecting SumoMe.com to Sumo.com.

DNW: Has there been customer confusion because you didn’t own Sumo.com?

Sumo: This was a strong motivator for us. Several sites popped up after us in the SaaS space that utilized “sumo” in their name. We were the original and now we are positioned as the original.

DNW: How did you justified the cost?

Sumo: In the long term it improves our brand value and positions us as the original Sumo brand.